We use this phrase 'what is known as' when we want to say that someone is 'something.' If we said 'Susan is known as an addlehead', it would mean that Susan alone is an addlehead. But if we say 'Susan is what's known as an addlehead', it means that many people are addleheads, and it is a common description. Hope this clears it up for you!

Isabel's answer is great. I would add, if you still think it should be "who", consider these two questions: What is an addlehead? (A forgetful person, someone who is scatterbrained) Who is an addlehead? (Me, you, Susan, my dad...) You use "what" when you are talking about the definition of "addlehead". This is the case here. We are saying that Susan fits the definition of "addlehead".

Unfortunately I don't know how why it should be what. But I can say when people say this kind of sentence they will ALWAYS say what and not who. If you do end up saying who you might have native speakers being confused. Sorry if this was not so helpful.